'Two-Newspaper' Group Wants in on Closed-Door Seattle JOA Talks

By: E&P Staff The Committee for a Two-Newspaper Town wants to know what's going on in the closed-door binding arbitration proceedings that could determine the future of the joint operating agreement (JOA) that is keeping two dailies publishing in Seattle.

After failing to convince Washington state's Attorney General's Office to intervene on antitrust grounds, the committee now plans to go to court to force public disclosure of some aspects of the private arbitration of the dispute between the owners of The Seattle Times and the Seattle Post-Intelligencer, the Times reported this weekend in an article by staff reporter Eric Pryne.

First, though, the cash-strapped committee needs to raise money -- about $25,000 -- the leaders of the group, attorney Anne Bremner and former Washington state Supreme Court Justice Phil Talmadge told the Times. The committee was originally created with the substantial financial backing of the Newspaper Guild local that represents employees at both papers.

Union members voted last May to withdrew its support from the group, saying it believed the arbitration process was the best way to quickly settle the dispute that threatens the future of the JOA.

The committee is a court-approved intervener in the litigation between The Seattle Times Co., whose principal owner is Frank Blethen and family, with a minority stake owned by The McClatchy Co., and the P-I's corporate owner, the Hearst Corp.

The Times handles production and business operations of the newspapers' JOA, and has invoked a clause that allows it to end the partnership, arguing that the cost of publishing the marketing-lagging P-I is bleeding the Times and other properties owned by the Blethen family-controlled Times Co. Hearst argues that much of the financial losses used to justify invoking the escape clause are either artificially high because of the Times' management of the JOA, or are beyond the control of either partner.

Last March, the two companies announced they had agreed to submit the main issues in their dispute to binding arbitration without possibility of appeal. The proceedings are to be held in private, though the final decision will be made public. The arbiter, a retired Washington state judge, is to make his ruling by May 31, 2007.

Hearst and Times Co. set one condition -- that the judge overseeing their lawsuits suspend all activity in the litigation during the arbitration process. The Two-Newspaper committee objected in court, and won.

But the judge put the Times Co. and Hearst claims and counterclaims on hold, while allowing arbitration to go ahead in private. The Times reported the proceedings are in the discovery stage right now.

"It's difficult to accept that two parties in a public proceeding can say, 'We're going to go behind closed doors - you other parties, so long,' " Talmadge told the Times.

If the committee gets funding for its legal plans, it will ask for access to the documents unearthed during discovery, Talmadge and Bremner told the Times.

The committee needs the documents, which it suspects address the financial condition of the JOA, to make its case, the group's leaders said. Talmadge also said the papers could be discussing a settlement that will lead to the closing of one of the papers.

"The fear really is that we get frozen out," Talmadge told the Times.